I eagerly awaited the report of the Blue Ribbon Panel for Aviation Security, called together last year by the U.S. Travel Association. It was co-chaired by former DHS Secretary Tom Ridge, former Congressman Jim Turner of the House Homeland Security Committee, and Sam Gilliland, CEO of Sabre Holdings. Its 11 other members included former American Airlines CEO Bob Crandall, former NTSB board member Kathryn Higgins, FedEx Express CEO David Bronczek, and San Antonio Airport Director Frank Miller. Given this combination of expertise and authority, you might have expected something of a business-as-usual report. But I’m delighted to say that this report, released last month, is anything but that. (www.ustravel.org/sites/default/files/page/2011/03/A_Better_Way_032011.pdf)

First the Blue Ribbon Panel estimated the huge economic consequences of the current aviation security system: not merely the ever-increasing TSA budget and the cost to airports but also the much larger negative impacts on air travel and cargo. Next, they laid out in some detail a better system, a more risk-based system that challenges the current one-size-fits-all approach. And they concluded that if anything like this is to happen, Congress must lead the way by changing the law to restructure TSA’s responsibilities.

The most prominent policy change called for in the report, A Better Way: Building a World Class System for Aviation Security, is a three-tier checkpoint design based on implementing a real Trusted Traveler system. The Panel noted that Congress in the original 2001 legislation creating the TSA called for the creation of a voluntary trusted traveler program in which frequent travelers who agreed to a background check and a biometric identity card could get expedited treatment at the checkpoint (and not just in the lines leading up to the checkpoint, which was all TSA allowed in its short-lived “registered traveler” program).

The proposed system is perhaps more accurately labeled as two-tier, since it would divide travelers into Trusted Travelers with expedited checkpoint passage and all others, who could choose between image-based screening (apparently including body-scanners) and physical screening (presumably including pat-downs). I think the large majority of non-frequent travelers should be treated better than that, since this second category still seems based on the assumption that everyone in this group is equally likely to be a threat. I would reserve intrusive screening (either by body-scanner or pat-down) to those meeting some kind of watch-list threshold, and would let most ordinary travelers continue to experience checkpoint scrutiny like TSA provided before implementation of body scanners. Body scans and/or intrusive pat-downs would be reserved for high-risk, not ordinary travelers.

That said, the report offers a number details on how a Trusted Traveler program might be set up, including how it could begin with all those already vetted in any of the following categories:

·Members of risk-based programs such as Global Entry, SENTRI, NEXUS, and FAST;

·Holders of a valid Transportation Worker ID Card (TWIC);

·Federal employees and contractors with an active security clearance of Secret or higher;

·Active federal law enforcement officers;

·Airport workers who have been vetted for SIDA access (unescorted access to secure areas of an airport).

After that, the program would be expanded to members of the public willing to undergo a fingerprint-based criminal history records check and meet several other requirements. They also recommend that Congress permit TSA to make use of commercial databases to assess the risk profile of TT applicants.

TSA would work with airlines to have the traveler’s TT membership encoded in the boarding pass. At the airport, TT members would enter a separate lane (or lanes) with verification kiosks. After the kiosk confirms the passenger’s identity as a TT member and that the boarding pass matches the passenger identity, the member and carry-ons would pass through an (undefined) explosives detection portal, as would the member’s carry-ons. But there would be no need to remove shoes, jacket, belt, etc. or take your laptop out of its bag. This requirement for explosives detection seems inconsistent with the idea that TT members have been pre-cleared as low-risk. An alternative (which the report also includes) is to have the kiosks programmed to randomly designate a very small percentage of TT members for normal screening.

Despite these concerns, I commend the Blue Ribbon Panel and the US Travel Association for moving the ball down the field, in the direction of a risk-based aviation security system. The task we all face now is to get Congress to take action.

Move into Multimodal Causing Problems for MWAA

Several years ago policymakers in Virginia turned down several private-sector proposals to build the planned heavy rail line to Dulles airport. Instead, they gave the job to the Metropolitan Washington Airports Authority (MWAA), the operator of Reagan National and Dulles International Airports. And to avoid the need for billions of dollars in taxpayer subsidy to build this white elephant of a rail project, those same policymakers gave the money-making Dulles Toll Road to MWAA. Subsequently, tolls have been sharply increased on the toll road, and commuters on the route face much higher future increases if the Dulles Rail project (a) experiences typical rail mega-project cost overruns of 45% and/or (b) requires significantly higher operating subsidies, due to the typical rail mega-project over-estimate of ridership by 65%. (These figures come from a database of 258 transportation mega-projects, discussed in Bent Flyvbjerg et al., Megaprojects and Risk, published by Cambridge University Press in 2003.)

According to a March 1 article in the Washington Examiner, a 2009 MWAA bond prospectus disclosed that tolls would be going up a lot more to pay off what is now projected as $18 billion in principal and interest for Phase 2 bonds for the rail project (the phase that would actually bring it to Dulles Airport). The total principal and interest for both phases is now estimated at $30 billion. Rep. Frank Wolf (R,VA), who represents the area, has asked both the DOT Inspector General and the GAO to audit MWAA over these enormous costs.

Then there’s the controversy over selection of MWAA’s new CEO. As of early March, the finalist appeared to be the executive director of the San Francisco Municipal Transportation Agency, operator of the Muni subway. Nathaniel Ford was formerly general manager of Atlanta’s MARTA heavy rail system, which at least has a line to the Atlanta airport. But Ford has exactly zero airport management experience. This prompted the Washington Examiner to suggest that the “Transit tail is wagging the airport dog.” In mid-March MWAA’s board re-opened the search.

Finally, in early April the MWAA board selected the far more costly of two alternatives for the rail station at the airport. They chose the underground design, which is estimated to cost $330 million more than the 500-feet farther-away above-ground design. That decision was promptly slammed by the Washington Post as “a Cadillac plan for a Prius age.”

By doing the state government’s bidding in getting into the toll road and rail transit businesses, MWAA has been unwittingly transformed into a “port authority” kind of entity—a multi-modal creature in which whichever set of paying customers generates the largest revenue stream gets milked to cross-subsidize other customers. This does not bode well for sound, cost-effective management of its two critically important airports.

In the December 2009 issue of this newsletter, I reported on a landmark research paper in the Journal of Urban Economics by Tae Oum and colleagues, “Ownership Forms Matter for Airport Efficiency.” They used a global data set of 109 airports to look at the relative productive efficiency of several different types of airport ownership structure. The least efficient airports in the whole data set were those owned by U.S. port authorities. As MWAA continues morphing into a port authority, the evidence is accumulating about what this will mean for efficient, productive operation of its airports.

Airline Belly Cargo Still a Problem

Last summer I expressed skepticism that TSA would meet the Aug. 1, 2010 deadline for screening all domestic belly cargo carried on passenger planes. My skepticism was based largely on my reading of a June 2010 GAO report that raised more questions than it answered. Nevertheless, TSA announced last August that it had met that deadline, and was now on the way toward meeting its 2013 deadline for screening all belly cargo on flights from overseas inbound to the United States.

So I read with great interest the March 9, 2011 testimony by GAO’s Steve Lord, Director of Homeland Security and Justice Issues. In the understated manner typical of GAO’s reports, Lord reminded members of the House Subcommittee on Transportation Security of a number of sobering facts. Let’s begin with the supposedly 100% inspected domestic belly cargo.

First, domestic cargo accounts for only 56% of the belly cargo currently in U.S. skies; the balance is inbound cargo that is still largely unscreened. Second, of the domestic cargo that is supposedly being 100% screened since last August, three-fourths of it is in the cargo compartments of wide-body planes. And most of that cargo is carried on large pallets and containers for which no inspection technology has yet been TSA-certified. As Lord dryly pointed out, “TSA is conducting qualification testing to determine which screening technologies [for such containers] are effective at the same time that air carriers are using these technologies to meet the mandated requirement to screen air cargo transported on passenger aircraft.” Third, TSA does not have a mechanism to verify the self-reported screening data from the various Certified Cargo Screening Program (CSSP) participants, and it still has not even completed the staffing study that is supposed to determine how many inspectors it will need for such verification.

Turning to inbound cargo, Lord reported that TSA is working with individual foreign governments to develop international air cargo security standards, through ICAO (the International Civil Aviation Organization), but that process has a long way to go. TSA is also supporting the IATA (International Air Transport Association) approach called Secure Freight, aimed at securing the entire air cargo supply chain—something like an international version of our CSSP. TSA has developed an approach called the National Cargo Security Program that would recognize foreign air cargo security programs that TSA judges to provide a level of security comparable to TSA’s own. Of the 20 countries in prospect for the program (which generate around 90% of incoming air cargo), TSA has completed a (positive) review of one, and is working with “several other countries” currently. Yet the same limitations that apply to domestic belly cargo also apply to inbound cargo: no approved inspection technology for unit-load device pallets or containers used on wide-body aircraft (which most inbound passenger flights use) and no way to verify data from airlines, forwarders, or governments overseas.

It is not clear exactly what deadline TSA thinks it has met.In my view, the August 2010 deadline for domestic belly cargo has not been met. And TSA’s current claim that it will meet the inbound belly cargo by the end of 2011 (instead of the previous 2013 deadline) is highly questionable.

Turboprops and Short-Haul Service

I have written here previously about my admiration for Toronto-based Porter Airlines. It serves more than a dozen destinations in the United States and Canada using Bombardier Q400 twin turboprop aircraft seating 70 passengers. The low-fare but high-service airline has been very popular with short-haul business travelers. Its success seems to belie the conventional wisdom that people won’t fly turboprops in an era of regional jets, especially the larger 70 to 90-seat variety. Yet planes like the Q400 are quieter and far more fuel-efficient than comparable jets, and on routes of 250 to 500 miles, their gate-to-gate time is not that much longer than that of jets.

I was therefore pleasantly surprised to learn of a recent PhD dissertation at UC Berkeley. “Optimal Intercity Transportation Services with Heterogeneous Demand and Variable Fuel Price” is by Megan Smirti Ryerson. Sparking her research was the rise in fuel prices during the past decade, and their likely upward trajectory in future years. Would that help create a viable new niche for turboprops? Ryerson created a total logistics cost model of intercity transport, using the north-south California market as a testbed. It includes three mode choices: jet, turboprop, and high-speed rail, plus passengers with a whole range of values of travel time. According to her modeling results, at low fuel prices, jets mostly prevail, but with higher prices, turboprops and high-speed rail (ignoring its huge capital cost) become more attractive to passengers.

She also points out that if our airport system opened up smaller airports to turboprop service, air travel could become a lot more convenient in our decentralized metro area environments. “Imagine if you’re living on the outskirts of the Bay Area,” Ryerson told the Berkeley Transportation Letter (http://its.berkeley.edu/btl/2011/winter/turboprop). Currently, you have to drive to Oakland or SFO to catch a plane to LAX. What if you could take a smaller turboprop from, say, Sonoma, to LAX and eliminate a jet flight from SFO?” Or, I would add, what if you actually want to go from Sonoma to Long Beach or Thousand Oaks, which are part of metro Los Angeles but hours away from LAX on the congested freeways? Those are the kinds of trips many travelers need to make, and they are not well served currently either by the major airports or by the hugely costly high-speed rail proposal. Ryerson also finds that frequency of flights is a higher priority than low ticket prices for many passengers—another feature that is easier to provide with smaller, inexpensive turboprops.

I also note with interest the proposal for a start-up airline called National West Airlines, whose business plan features turboprop service. Its website states that its business model is based on those of Southwest and Allegiant, but aiming to serve smaller cities using turboprop aircraft. (http://nationalwestairlines.com/1.html) I have no connection with this company and no idea how far along they may be towards their projected late 2011 start-up, but I will be following this attempt with interest.

A Dark-Horse Candidate for Added New York Runways

If you’re an aviation buff like me, the name Floyd Bennett Field probably rings a bell for you. It’s located in Brooklyn, across Jamaica Bay from Kennedy International. It was built in the late 1920s and was used by such aviation pioneers as Amelia Earhart, Howard Hughes, and Wiley Post. The Navy took it over in 1941 and flight operations continued there on into the 1960s. It closed in 1971 and became the property of the National Park Service, which has preserved the hangars and two of its three runways, the longest of which is 6,000 feet.

The airport came to my attention again thanks to an AP story dated March 28th, “With NYC’s Runways Overloaded, ‘Ghost Airport’ Near JFK Sits Tantalizingly Off-Limits.” The article reported that various parties are suggesting that if Floyd Bennett’s main runway were extended (into the bay) to 8,500 feet, that could be the most cost-effective way of adding much-needed airport capacity for the metro area. As I reported in the February issue of this newsletter, the influential Regional Plan Association in January released a major study making the case for additional airport capacity, despite the enormous cost of doing so.

The AP reporter asked the RPA’s Jeff Zupan about Floyd Bennett, but he replied that “We dropped that early on; it’s just too close to Kennedy.” That is certainly true with current air traffic control technology, but I’m not convinced that will be the case if this country fully implements the planned NextGen replacement. AP quotes Paul Freeman, head of flight testing for ITT Corporation as saying, “We’re working on technology that will really free up a lot of the traditional limits of air traffic control. It would definitely allow something like a Floyd Bennett Field to be active again.”

In fact, the FAA has under way a New York airspace redesign effort, aimed at de-conflicting the approach and departure paths for Kennedy, LaGuardia, and Newark, which the RPA report acknowledges will provide some increase in effective runway capacity at these existing airports. I suspect that the redesign effort has not even considered the possibility of a re-opened Floyd Bennett. But given the relatively modest cost of restoring it as an airport and the much greater airspace flexibility that NextGen will make possible, this kind of outside-the-box idea should not be dismissed out of hand.

I got a lot of feedback on last month’s article on the side effects (such as increased flight cancellations) of the US DOT’s draconian tarmac delay rule. Former American Airlines CEO Robert Crandall wrote to ask why DOT “does not take the alternative route of requiring each airport to provide guaranteed exit to any passenger wishing to deplane after three hours on the tarmac. Using appropriate vehicles, I know of no reason why every airport cannot allow passengers aboard [such an aircraft] to deplane (without their bags, to be delivered by the airline when they are available), rather than continuing to wait aboard for departure. The same vehicles could be used to deliver fresh supplies of food, water, and other needed supplies to aircraft delayed for extended periods.” I’m interested in hearing airport responses to this idea.

Another Unintended Consequence of Tarmac Delay Rule

Victor White, head of the Wichita Airport Authority, wrote to point out that pre-emptive cancellations due to the delay rule hurt small airports like his more than larger airports. He points out that if, say, 5-10% of flights to and from Wichita end up being cancelled, some fraction of the affected passengers will simply cancel their trips, since it might take many days to get a replacement flight, given today’s high load factors and the lack of options at smaller airports. And the loss of flights cuts airport revenue, which means that the remaining flights end up paying more (under a residual-cost system), over time.

Airport Lounge for Everyone

A start-up company called Airspace Lounge hopes to capitalize on passengers unwilling to pay several hundred dollars a year to belong to an airline club but might be willing to pay $17.50 to use an airport lounge occasionally. Its first lounge is scheduled to open in May at Baltimore/Washington International Airport (BWI). Amenities will include free wi-fi and power outlets at every seat, plus snacks and meals. Drinks will be available for purchase at the lounge’s bar. If the first lounge is a success, the company hopes to open as many as 40 others around the country.

IATA Favors Brazilian Airport Privatization

On a visit to Brazil, the director of the International Air Transport Association, Giovanni Bisignani, called for privatization of the country’s principal airports via long-term concessions, to get them into shape to handle traffic for the 2014 World Cup and 2016 Olympics. He coupled this with a recommendation for an independent regulator, which he said has worked well in Argentina and India.

Trusted Traveler for Airline Crews

The TSA has agreed to move forward with 90-day tests at a number of airports of CrewPass, a kind of trusted traveler system for cockpit and cabin crews. The program was developed jointly by the Air Line Pilots Association (ALPA) and the Air Transport Association (ATA). It will link airline employee databases to enable TSA personnel at checkpoints to verify the identity and employment status of crewmembers, to speed their way through security. While only cockpit crews will be involved in the 90-day tests, cabin crews are envisioned as being part of CrewPass when it is rolled out following the operational tests.

Who Owns Europe’s Airports?

Airports Council International-Europe has produced an eye-opening report called “The Ownership of Europe’s Airports.” It categorizes 404 European airports into three main categories: public-sector ownership, mixed ownership, and private ownership. Overall, 78% are in the first category, 13% in the second, and 9% are fully privatized. But in terms of passengers handled, only 52% are accounted for by public-sector airports, which means 48% are served by partially or fully privatized airports. And within the next five years, at least 20 additional European airports are expected to be privatized, either fully or in part. In addition to the overview, the report provides details on the airport sector in each of 45 European countries.

The Government of Greece has hired BNP Paribas and National Bank as advisors on its plan to offer some or all of its remaining ownership stake in the Athens International Airport. Separately, it has hired Citigroup and Piraeus Bank to advise on redeveloping the land that formerly hosted the old Athens airport at Elliniko.

Moscow Airport Privatization

On March 28th, Prime Minister Vladimir Putin announced that the Russian government will combine Moscow’s Sheremetyevo and Vnukovo Airports into a single corporate entity which will subsequently be privatized. Currently the former is 100% government-owned and the latter 75% government-owned (with the balance owned by the city).Moscow’s third airport, Domodedovo, is privately operated under a long-term lease agreement. The national government will buy the city’s 25% stake in Vnukovo for $1.5 to $1.7 billion and will upgrade its runways. It also plans to add a third runway at Sheremetyevo prior to privatizing the combined entity.

Quotable Quotes

“[M]ost new technologies and procedures are deployed on a large scale—instead of on a targeted basis determined by risk—because TSA screens nearly all airline passengers using the same methods of primary screening. Using a ‘one size fits all’ approach for passenger screening and continually adding to the number of security procedures at each passenger checkpoint contributes to large annual increases in TSA’s budget. From FY 2004 through FY 2010, TSA’s annual budget increased by almost 70 percent,from $4.5 billion to $7.6 billion. . . . The American people might be surprised to learn that in some years, the budget of TSA was greater than that of the Federal Bureau of Investigation, which investigates cases of terrorism and handles the entire federal law enforcement agenda.”

--Blue Ribbon Panel for Aviation Security, A Better Way: Building a World Class System for Aviation Security, U.S. Travel Association, March 2011, p. 8.

“People who study terrorism—or crime, or natural disasters—generally conclude that after a certain point, it’s better to work on ways to recover from an attack, or limit its damage, rather than spend limitlessly toward the impossible end of reducing the risk to zero. The design of the Internet is an extreme example: it was built, in the Cold War era, to repair itself (by re-routing traffic) if some nodes were destroyed in an attack. Or air bags in cars: we try very hard to prevent crashes, but since some still occur, air bags make them less dangerous. Or: fortified cockpit doors in airliners. There could well be another terrorist who gets onto an airplane with weapons; but there will never be ‘another 9/11,’ because cockpit-door design, and alert fellow passengers, will keep hijackers from turning a plane into a missile. As applied to airport security, this approach means trying very hard to keep dangerous passengers and cargo off airplanes—but also thinking about how the same money, effort, social friction, etc. might be used in ‘resilience’ efforts.”

“The only practical way to increase the security of inbound air cargo is to rely on a risk rating system rather than a physical screening system. It simply makes sense to decide which packages and flights are most likely to be dangerous, and focus on them. Besides, the information collection and analysis would not even require building new infrastructure or imposing our rules on foreign soil. Homeland security officials already collect electronically most of the data needed for risk analysis of air cargo.”

“I have mixed emotions about technology, because no matter what that technology is, it’s the kind of thing that you can’t not do; it’s a deterrent. [But] how many bombs have we found at a screening checkpoint since we started? In virtually every case, the successful intervention of a terrorist scheme has not been detected by technology; it’s been by intelligence. I would rather triple the intelligence budget and catch the terrorist three weeks before he comes to the airport, rather than have the technology be, not the first resort, but the last resort in a 20-second pass through a machine.”